AC114 Unit 8 Discussion Accounting for Merchandising Businesses
Accounting for Merchandising Businesses
Computers have become a staple in the lives of most people. There are many companies that provide computers on the market. Assume that you are planning to purchase a new laptop for your classes, work and home use. Please go to the websites of two major United States computer manufacturers such as Hewlett Packard®, Acer®, Apple®, etc. and make a selection.
Once you have made your selection, please complete the following items and questions:
- Compare the following items for your selections:
- Price
- Delivery Charges
- Financing Options
- Discounts
- Coupons
- Warranties
- Installation Offered
- Recycling of Old Components Offered
- What are some factors that can impact the gross profit of a merchandise company?
- One item that can help investors understand the relationship between net sales and net profits is the gross profit rate. The calculation explanation for this financial ratio is found on page 5-18 of the textbook. Find the financial information needed to calculate the gross profit rate for your two selected companies.
- Which company has the better ratio?
- Why do you think this is the case?
Please use the most recent annual report available. Also, make sure to use the same year’s annual report for your companies.
AC114 Unit 8 Discussion Accounting for Merchandising Businesses Answer
After reviewing both companies’ 2020 Income statements calculating Gross Profit/Net Sales, I was able to come up with the Gross Profit Rate for each company. Apple ($57,411,000/$274,515,000) had the highest Gross Profit Rate of 20.9% at the end of 2020 and HP ($10,440,000,000/$56,640,000,000) had a Gross Profit Rate of 18.4%. It was very clear that HP had sales in the billions whereas Apple had sales in the hundred million range. Even though Apple has a higher Gross Profit Rate, HP is earning more revenue due to volume of sales in comparison…………
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